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‘Second steppers’ face extra challenges

‘Second steppers’ face extra challenges

Category: Mortgages

Updated: 02/02/2011
First Published: 02/02/2011

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This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Homeowners looking to move on from their first property are facing extra challenges as they are likely to have bought their home at the top of the market.

Buyers looking to move up the property ladder from their first property – dubbed 'second steppers' – typically make their second move after four years, research from Lloyds TSB has found.

When the property market was booming in the mid 2000s, second steppers had an easier task, as their first properties increased in value, making the £48,000 gap between the average first time and second time home price bridgeable.

However, the price of an average first-time buyer property has fallen by £28,000 in the last four years, meaning almost one fifth of second steppers do not have enough equity in their home to move onwards and upwards.

The problems at the lower end of the market are being compounded by a fall in activity.

The number of sales of properties priced below £120,000 fell by 14% in 2010, while sales of properties between £120,000 and £200,000 fell by 13% last year.

By contrast, there was a rise in the purchase of properties over £200,000, while the number of sales of homes over £500,000 increased by 31%.

The lack of activity in the first time buyer market could force some homeowners into renting out their properties, rather than selling for less than they bought for.

A quarter of second steppers said they would look to rent out their home if the cannot sell at the current asking price.

"The key to achieving a sustainable housing market lies in homeowners moving up the housing ladder, maintaining a fluid movement throughout the market," said the report.

"Second steppers are living in the homes that first-time buyers need to buy to get the market moving. Without movement from second steppers, movement on the ladder comes to a standstill.

"For many, a necessary move to enable them to start a family or re-locate with work is held back by an erosion of equity and a widening gap between the cost of a first-time buyer and second step property."

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